Singapore’s weak real estate market saw the number of properties put up for auction climb 2.9 percent quarter-on-quarter to 180 units in the second quarter of 2015, reported The Straits Times citing a report from Knight Frank Singapore.
The number of smaller units auctioned, such as one- and two-bedrooms, increased 28.6 percent quarter-on-quarter to 27.
Knight Frank noted that owners of such units found it difficult to raise the rental income needed to pay off their mortgage.
Meanwhile, three of the four shoebox units auctioned were being sold by mortgagees. Notably, shoebox rentals are facing pressure from the growing supply of private homes, and their investment appeal may also be fading.
Although more properties were placed under the hammer in Q2, only seven were sold, down 36.4 percent from Q1 and 22.2 percent over the same period last year.
The auction success rate also dropped from 6.3 percent in Q1 to 3.9 percent in Q2.
As such, the auction sales value plunged 72.1 percent quarter-on-quarter to $10 million, possibly due to the June school holidays, said Knight Frank.
The decline may also be due to prospective buyers preferring to negotiate privately with sellers after the auctions. The wide disparity in price expectations of sellers and buyers may be a factor too.
Looking ahead, Knight Frank expects to see more owners exploring auctions during the second half of 2015. More mortgagee listings are also expected as property owners struggle to service their loans given the “continually weak market sentiment and increase in interest rates”.
Romesh Navaratnarajah, Singapore Editor at PropertyGuru, edited this story. To contact him about this or other stories email romesh@propertyguru.com.sg
